RISKS AND OPPORTUNITIES IN BANGLADESH

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CENTRE FOR POLICY DIALOGUE (CPD) B A N G L A D E S H. a c i v i l s o c i e t y t h i n k t a n k. Bangladesh Frontier Forum. RISKS AND OPPORTUNITIES IN BANGLADESH . Debapriya Bhattacharya . - PowerPoint PPT Presentation

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  • RISKS AND OPPORTUNITIES IN BANGLADESH Debapriya Bhattacharya

    Bangladesh Frontier ForumTelenor HQ, Fornebu, Norway 17 April 2012

  • Bangladesh: Development was possible! Bangladesh began her journey in 1971 being the test case of development as portrayed by Faaland and Parkinson (1976)A number of pessimisms worked against any optimistic review Large population and high population growthHigh level of povertyHit by a devastating warNo strategic importance

    Bhattacharya: Risks and Opportunities in Bangladesh*Faaland and Parkinson (1976) concluded - If development could be made successful in Bangladesh, there can be little doubt that it could be made to succeed anywhere else. It is in this sense that Bangladesh is the test case for development.

    For more than four decades, Bangladesh belied the pessimistic prophecies of economists and displayed extraordinary resilience in the face of natural catastrophes and man-made calamities. (Akbar Ali Khan 2011)

    Bhattacharya: Risks and Opportunities in Bangladesh

  • Economy is Growing with the rest of the WorldBDs share in World GDP and World GNI has started to rise in recent years.Bangladesh remained steady as the 47th largest economy among 124 countries reported.According to Goldman Sachs report (in 2005), by 2025, Bangladesh may emerge as the 22nd largest economy in the world and will be an important member of N-11.Source: Calculated from WDI Database*Bhattacharya: Risks and Opportunities in Bangladesh

    Bhattacharya: Risks and Opportunities in Bangladesh

  • During 1980s Bangladeshs average GDP growth was a little higher than the world and middle income countries.During the last two decades, it surpassed the global average and remained close to average of middle income countries.Source: Calculated from WDI DatabaseGDP Growth Remained Close to Middle Income Countries*Bhattacharya: Risks and Opportunities in Bangladesh

    Bhattacharya: Risks and Opportunities in Bangladesh

    Chart1

    43.73.23.3

    23.73.23.3

    43.73.23.3

    53.73.23.3

    33.73.23.3

    43.73.23.3

    43.73.23.3

    23.73.23.3

    33.73.23.3

    63.73.23.3

    34.83.82.8

    54.83.82.8

    54.83.82.8

    44.83.82.8

    54.83.82.8

    54.83.82.8

    54.83.82.8

    54.83.82.8

    54.83.82.8

    64.83.82.8

    55.76.22.6

    45.76.22.6

    55.76.22.6

    65.76.22.6

    65.76.22.6

    75.76.22.6

    65.76.22.6

    65.76.22.6

    65.76.22.6

    65.76.22.6

    Bangladesh

    Decade average (Bangladesh)

    Decade average Middle Income)

    Decade average (World)

    GDP Growth (%)

    trade in servises

    Time NameTrade in services (% of GDP)Decade Average

    198133.4

    198243.4

    198343.4

    198433.4

    198533.4

    198633.4

    198733.4

    198833.4

    198943.4

    199043.4

    199144.6

    199244.6

    199344.6

    199454.6

    199564.6

    199644.6

    199754.6

    199844.6

    199954.6

    200054.6

    200155.9

    200255.9

    200355.9

    200455.9

    200565.9

    200665.9

    200775.9

    200875.9

    200965.9

    201075.9

    trade in servises

    Trade in services (% of GDP)

    Decade Average

    Trade in servises (%of GDP)

    trade open

    Time NameTrade (% of GDP)

    198023

    198120

    198221

    198321

    198416

    198519

    198618

    198717

    198818

    198919

    199020

    199119

    199220

    199323

    199423

    199528

    199630

    199730

    199832

    199932

    200033

    200137

    200233

    200334

    200436

    200540

    200644

    200746

    200849

    200946

    201043

    trade open

    Trade (% of GDP)

    Trade (%of GDP)

    Aid

    Time NameNet ODA received (% of GNI)

    19815

    19827

    19836

    19846

    19855

    19867

    19877

    19886

    19897

    19907

    19916

    19926

    19934

    19945

    19953

    19963

    19972

    19983

    19993

    20002

    20012

    20022

    20033

    20042

    20052

    20062

    20072

    20082

    20091

    Aid

    Aid (% of GNI)

    LF

    Time NamePopulation ages 15-64 (% of total)Population, total

    19805180,624,42341118455.7341

    19815282,883,61643099480.3243

    19825285,156,39644281325.9244

    19835287,459,80245479097.0445

    19845289,828,43446710785.6847

    19855292,283,59847987470.9648

    19865394,825,49950257514.4750

    19875397,429,29051637523.752

    198853100,062,32253033030.6653

    198953102,681,62754421262.3154

    199054105,256,02656838254.0457

    199154107,768,74958195124.4658

    199255110,225,55560624055.2561

    199355112,645,4606195500362

    199455115,059,01563282458.2563

    199556117,486,95265792693.1266

    199656119,928,68267160061.9267

    199757122,370,40369751129.7170

    199858124,803,35172385943.5872

    199958127,214,84173784607.7874

    200059129,592,27576459442.2576

    200159131,944,58477847304.5678

    200260134,266,42880559856.881

    200360136,514,76881908860.882

    200461138,633,40184566374.6185

    200561140,587,92285758632.4286

    200662142,353,50188259170.6288

    200762143,956,80589253219.189

    200863145,478,3009165132992

    200964147,030,14594099292.894

    201064148,692,13195162963.8495

    LF

    Potential Labour ForcePopulation between age 15-64 yrs (in million)

    poverty

    1990

    BD75.9

    Worlds1298.1

    2000

    BD

    Worlds

    2010

    BD

    Worlds

    PPP

    BDMid

    GDP per capita, PPP (constant 2005 international $)GDP per capita, PPP (constant 2005 international $)

    19806772,657

    19816832,671

    19826812,684

    19836902,697

    19847062,775

    19857102,842

    19867202,895

    19877272,968

    19887233,035

    19897233,073

    19907473,069

    19917543,069

    19927743,048

    19937933,074

    19948083,107

    19958303,183

    19968513,295

    19978783,408

    19989063,435

    19999323,513

    20009703,664

    20011,0033,753

    20021,0293,872

    20031,0654,056

    20041,1154,319

    20051,1654,585

    20061,2264,911

    20071,2915,291

    20081,3565,542

    20091,4195,634

    20101,4885,992

    PPP

    GDP per capita, PPP (constant 2005 international )

    gdp sector

    GDP per capita, PPP (constant 2005 international US$)

    gdp%

    AgricultureIndustryServicesAgricultureIndustryServices

    1980203941322148

    1981203841322147

    1982203842312148

    1983203842312247

    1984203842322147

    1985193743332146

    1986193744322247

    1987193844322147

    1988183745312148

    1989183845302149

    1990183746302148

    1991173647302248

    1992153648292248

    1993153748262450

    1994153749262450

    1995143551262549

    1996143551262549

    1997133551262549

    1998133552252649

    1999123553262549

    2000113653262549

    2001113554242650

    2002113554232651

    2003113653222652

    2004113752212752

    2005103752202753

    2006103852202852

    2007103753192852

    200893754192952

    2009103556192953

    2010103555192853

    gdp%

    Agriculture

    Industry

    Services

    Share (%)

    Agriculture

    Industry

    Services

    Share (%)

    BDmidworld

    BangladeshDecade average (Bangladesh)Decade average Middle Income)Decade average (World)

    198143.73.23.3

    198223.73.23.3

    198343.73.23.3

    198453.73.23.3

    198533.73.23.3

    198643.73.23.3

    198743.73.23.3

    198823.73.23.3

    198933.73.23.3

    199063.73.23.3

    199134.83.82.8

    199254.83.82.8

    199354.83.82.8

    199444.83.82.8

    199554.83.82.8

    199654.83.82.8

    199754.83.82.8

    199854.83.82.8

    199954.83.82.8

    200064.83.82.8

    200155.76.22.6

    200245.76.22.6

    200355.76.22.6

    200465.76.22.6

    200565.76.22.6

    200675.76.22.6

    200765.76.22.6

    200865.76.22.6

    200965.76.22.6

    201065.76.22.6

    Bangladesh

    Decade average (Bangladesh)

    Decade average Middle Income)

    Decade average (World)

    GDP Growth (%)

  • Share of modern sector is also increasing.However, compared to the middle income countries, Agriculture remains important source of GDP.Source: Calculated from WDI DatabaseGDP Composition: Increasing Role of Modern Sectors*BangladeshMiddle Income CountriesBhattacharya: Risks and Opportunities in Bangladesh

    Bhattacharya: Risks and Opportunities in Bangladesh

  • Per Capita Purchasing Power Doubled in Three DecadesBangladeshs per capita purchasing power doubled between 1980 and 2010 (from $677 to $1,488)Per capita purchasing power of middle income countries also doubled (from $2675 to $5992) the gap did not change.Source: Calculated from WDI Database*BangladeshMiddle Income CountriesBhattacharya: Risks and Opportunities in Bangladesh

    Bhattacharya: Risks and Opportunities in Bangladesh

  • Large Share of Global PoorBangladesh & World Poverty 1990 (million)Bangladesh & World Poverty 2005 (million)In 1990, Bangladesh had 4.3% of the worlds poor population, however, in 2005 this share increased to 5.5% (effect of China)Despite this, Bangladesh poverty rate has declined from 66.8% in 1990 to 49.6% in 2005Bangladesh has the 5th largest poor population in the world (in 2005 after India, China, Nigeria and Pakistan).Poverty headcount ratio at $1.25 a day (PPP) (% of population) has been used as the indicator of poverty*Bhattacharya: Risks and Opportunities in BangladeshSource: Calculated from WDI Database

    Bhattacharya: Risks and Opportunities in Bangladesh

  • Poverty Reduction AcceleratedPoverty declined to 31.5% in 2010 from 40.0% in 2005Gini coefficient for income and expenditure declined from 0.47 in 2005 to 0.46 in 2010 However, consumption gini coefficient declined from 0.33 in 2005 to 0.32 in 2010 Poorest divisions (western parts) performed astonishingly better than the capital and other moderately poor districts

    Division-wise Poverty Rate

    Bhattacharya: Risks and Opportunities in Bangladesh*Source: HIES 2010

    Bhattacharya: Risks and Opportunities in Bangladesh

  • Bangladesh had the 8th largest population in the world in 2010 among 210 reported countries (8th in 1980) though population growth rate decreased (from 2.9% in 1981 to 1.2% in 2010)Bangladeshs share in global labour force is now almost equal to her share in population.The size of the potential labour force is increasing gradually which is projected to increase in the next two decades as well. Growth rate of labour force has been higher than the population.Source: Calculated from WDI Database*Growing Potential Labour ForcePotential Labour Force (Bangladesh)Bangladeshs Share in Global population and Labour ForceBhattacharya: Risks and Opportunities in Bangladesh

    Bhattacharya: Risks and Opportunities in Bangladesh

  • Bangladesh is increasingly becoming a trade-led from an aid dependent country.Source: Calculated from WDI Database*From an Aid Dependent to a Trade-led CountryBangladeshs Aid receipt as % of GNI Bangladeshs Trade OpennessBhattacharya: Risks and Opportunities in Bangladesh

    Bhattacharya: Risks and Opportunities in Bangladesh

  • Leading Manufacturing Exporter among LDCsManufacturing products (e.g. RMG) has become dominant exportable products.*Source: Calculated from WDI DatabaseBangladeshs Manufactures exports (% of merchandise exports)Bhattacharya: Risks and Opportunities in BangladeshBangladeshs share in global export is still very low but gradually increasing.As a exporting country, Bangladesh ranked 66th in 2010 among 108 reported countries (74th in 1980).

    Bhattacharya: Risks and Opportunities in Bangladesh

  • Between 1980 and 2010, remittances inflow increases 32 times.Share of remittances inflow also increases from 0.9% to 2.1%Source: Calculated from WDI Database*Major Destination of Global RemittancesBangladeshs Share in Global Workers' remittances$10.9 billion in 2010Bhattacharya: Risks and Opportunities in BangladeshAs a remittance receiving country, Bangladesh ranked 7th in 2010 among 163 reported countries (25th in 1980).

    Bhattacharya: Risks and Opportunities in Bangladesh

  • Bangladesh has achieved higher growth in foodgrain production compared to her population growth.Foodgrain production has doubled in last two decades.Per capita foodgrain availability is also increasing in Bangladesh, from 453 gm in FY92 to 605 gm in FY10

    Source: Calculated from BBS and Bangladesh Bank data*Moving towards Self-sufficient in Foodgrains ProductionBangladeshs Population and Foodgrain ProductionPer Capita Food AvailabilityBhattacharya: Risks and Opportunities in Bangladesh

    Bhattacharya: Risks and Opportunities in Bangladesh

  • Successful to Navigate through GFCBangladesh was the only country in the BRICs and N-11 where macro stability components improved. GDP growth only suffered a relatively mild slowdownBangladeshs macroeconomic performance has been stable despite the global financial crisis;Remittance flow has remained largely buoyantExport growth has been resilient at double digitAlthough revenue mobilization has been partially affected but due to strong domestic collection it has been largely offsetBangladesh has come under purview of two sovereign credit rating agencies. Bangladesh was awarded 'BB-' for long term and 'B' for short term by Standard and Poor's and Ba3 by Moody's. *Bhattacharya: Risks and Opportunities in Bangladesh

    Bhattacharya: Risks and Opportunities in Bangladesh

  • Bangladesh in Economic and Political AlliancesBangladesh is well situated in every sense to take advantage of her strategic location flanked by the two fastest growing economies in the world (China and India).Bangladesh integrate its economy into the global value chain, and become a trade and transportation hub in South and South-East Asia.*Bhattacharya: Risks and Opportunities in Bangladesh"In many ways, there lies an important asset for Bangladesh. I believe that Bangladesh has the potential to become Singapore in South Asia. Pascal (2011)

    Bhattacharya: Risks and Opportunities in Bangladesh

  • Satisfactory Progress towards Attaining MDGsBangladeshs progress towards achieving MDGs looks promising in most areas: Goal 1: Eradicate Extreme Poverty and Hungergoal will partially be metProportion of population below poverty linePoverty gap ratioGoal 2: Achieve Universal Primary Educationgoal will partially be metNet enrolment ratio in primary educationGoal 3: Promote gender equality and empower womengoal will probably be metRatios of girls to boys in primary educationRatios of girls to boys in secondary education*Bhattacharya: Risks and Opportunities in Bangladesh

    Bhattacharya: Risks and Opportunities in Bangladesh

  • Satisfactory Progress towards Attaining MDGsBangladeshs progress towards achieving MDGs looks promising in most areas: Goal 4: Reduce Child Mortalitygoal will be metUnder-five mortality rateInfant mortality rateProportion of 1 year-old children immunised againstGoal 5: Improve Maternal Healthgoal will be metMaternal mortality ratio (Goal 5)Contraceptive prevalence rate (Goal 5)*Bhattacharya: Risks and Opportunities in Bangladesh

    Bhattacharya: Risks and Opportunities in Bangladesh

  • Satisfactory Progress towards Attaining MDGsBangladeshs progress towards achieving MDGs looks promising in most areas: Goal 6: Combat HIV/AIDS, Malaria and other DiseasesHIV prevalence among population aged 15- 24 yearsDeaths of Malaria per 100,000 populationProportion of children under 5 sleeping under insecticide-treated bed nets (13 high risk malaria districts)Proportion of children under 5 with fever who are treated with appropriate anti-malarial drugsPrevalence of TB per 100,000 populationDeaths of TB per 100,000 populationDetection rate of TB under DOTSCure rate of TB under DOTS*Bhattacharya: Risks and Opportunities in Bangladesh

    Bhattacharya: Risks and Opportunities in Bangladesh

  • Leader in UN Peacekeeping MissionBangladesh is the highest troops and police contributing country in UN peace missions with engagement of 10,654 Bangladeshi peacekeepers in troubled regions across the world (10% of total).It was 1988 when Bangladesh's modest contribution began, with 31 officers as part of UNIMOG (UN Iraq-Iran Military Observer Group) in Iraq.Bhattacharya: Risks and Opportunities in Bangladesh*Till July 2011, 106 Bangladeshi soldiers have lost their lives.The first Bangladeshi women police contingent has joined the UN mission recently. Bangladeshi peacekeepers so far served in 12 out of 16 UN peacekeeping missions.

    Bhattacharya: Risks and Opportunities in Bangladesh

  • Growing Trade Relations between Bangladesh and NorwayDuring the same period, Bangladeshs import from Norway increased by 3.8 timesElectrical machinery, equipments and parts and Wood and articles of wood are the major imported products (89% of total imports)Bhattacharya: Risks and Opportunities in Bangladesh*In five years, between FY06 and FY11, Bangladeshs export to Norway increased by 6.4 timesTextile and Textile articles were the major exported products (96% of total export)Export and Import between Bangladesh and Norway ( mln $)Source: Calculated from Export Promotion Bureau and Bangladesh Bank data

    Bhattacharya: Risks and Opportunities in Bangladesh

  • More Scope for Cooperation in ODA and FDIFlow of bilateral ODA is small in Bangladesh from NorwayIn last 12 years (FY99-FY10) total FDI inflow from was only USD 420 million mainly to telecommunication sectorTotal FDI stock as on end of June, 2011 was only USD 142 millionBhattacharya: Risks and Opportunities in Bangladesh*ODA inflow from Norway FY73-FY10 ( mln $)Source: Economic Relations Division(ERD) and Bangladesh Bank dataFDI inflow from Norway FY99-FY10 ( mln $)

    Bhattacharya: Risks and Opportunities in Bangladesh

  • Challenges and Risks RemainsBreaking the 6 per cent threshold of Economic GrowthProviding Productive Employment to a Growing Young Labour ForcePromoting Economic Diversification (GDP, Export, Employment) for Structural ChangeLack of Infrastructure (Communication and energy)Maintaining Macroeconomic StabilityImproving Nature of DemocracyEnsuring Political StabilityFacing Growing Risks arising from Global ExposureImplementing Structural ReformsAdapting the Adverse Impacts of Climate Change Tackle High level of CorruptionBhattacharya: Risks and Opportunities in Bangladesh*

    Bhattacharya: Risks and Opportunities in Bangladesh

  • Bangladesh, Moving ForwardBhattacharya: Risks and Opportunities in Bangladesh*

    Bhattacharya: Risks and Opportunities in Bangladesh

  • Bangladesh, Moving ForwardBad governance "has not prevented Bangladesh from adopting fairly reasonable economic policies and from growing Paul Collier (2007)

    "Bangladesh shows us that even in circumstances that seem the most hopeless there are ways forward if the right strategies are applied, and if the right combination of investments is made". - Jeffrey D.Sachs (2005)Bhattacharya: Risks and Opportunities in Bangladesh*

    Bhattacharya: Risks and Opportunities in Bangladesh

  • Bhattacharya: Risks and Opportunities in Bangladesh*

    Bhattacharya: Risks and Opportunities in Bangladesh

    ***

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